Phillips 66 and Spectra Energy, both 50:50 joint venture owners in DCP Midstream, will contribute cash and assets to the partnership to shore up its balance sheet and improve its credit.
Spectra will contribute its ownership interest in the Sand Hills and Southern Hills NGL pipelines, which provide takeaway service from DCP Midstream and third-party plants in the Permian basin and the Eagle Ford shale and from the midcontinent, respectively, to fractionators on the Texas Gulf coast.
Phillips 66 will contribute $1.5bn in cash. The move follows efforts by DCP to cut costs and reduce commodity risk exposure in a lower-priced environment.
The transaction is subject to all parties entering into a definitive agreement and customary consents, including regulatory approvals and approval from Spectra Energy Partners' board of directors. It is expected to close in the fourth quarter.
cll/als/mgb
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